North East firms looking East in search of new markets

BACK in March, Corbridge-born Alan Reed arrived in Dubai - like many Brits before him - looking to build up business in the metropolis.

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BACK in March, Corbridge-born Alan Reed arrived in Dubai - like many Brits before him - looking to build up business in the metropolis.

It wasn’t his first visit. He’d been there in January, for one, and had been part of an exhibition in the city in November. But Alan wasn’t looking for a job in construction or an outlet for manufacturing. He was there to paint.

“I’m basically going over there to pick up commissions”, he says. “I do paintings and landscapes and cityscapes in places like the North East, Italy and Scotland.

“I started doing some work in Oman about four years ago, and because of that I was travelling out to the Gulf. At the moment, about 70% of my work based around the North East and 5-10% is in other parts of the UK. It’s mainly individual buyers and companies looking for commissions.”

While he can’t say as yet how successful this move will be, he’s not alone in seeking out work in this part of the Middle East. According to UKTI, the United Arab Emirates is the UK’s largest export market in the Middle East and North Africa. It sits at 16th in the table of export markets for the UK, with about £3.9bn in goods and services heading in that direction.

While the region didn’t escape the worldwide ravages of the recession, its status as a rapidly growing economy and the presence of tax-free zones makes it an attractive proposition to companies who’ve done sufficient research.

UKTI international trade adviser Geoff Charlesworth, who used to live in the region and has led several trade trips there, says there are opportunities “in basically every sector, including financial services and construction, all the way to education, advertising and promotion”.

He says: “There’s been something like 17% growth in non-oil revenues in this year already. When I was there last month, all the construction had started up again, admittedly partly because it was too expensive to mothball. But the government is paying its bills again, and it’s a popular market for exports because it’s basically a trading post that imports everything except oil and gas.”

Alan Reed has completed commissions for clients such as Coutts Bank, Rolls Royce, Northern Rock and royalty, but is interested to see if his “representational but not photographic style” is attractive to the Middle Eastern buyer.

He says: “I haven’t really got any pre-conceived ideas. It’s very much a new marketplace. Dubai has been affected by the recession just like everyone else, and you can see evidence of that in the building projects. I’ve picked up one or two pieces but I’m not closing my eyes to anything.

“What I’ve noticed is that Arabic art does tend to be favoured above Western art. There’s more symbolism and they tend not to favour representations of people as much. There’s also a strong preference for calligraphy.

“The things I’ve enjoyed doing the most are some of the old villages in mountainous areas. You’ve got small villages perched on the side of mountains with terraces for pomegranates.”

Today The Journal reveals which companies will win free places on a trade trip to Dubai in September, as part of a competition run by the Government of Dubai’s Department of Tourism and Commerce Marketing and Emirates Airlines.

Representatives of three firms will head to the region to scope out opportunities, and hopefully follow in the footsteps of other North East companies that have taken the leap. For example, Tyneside engineering firm Hart Door Systems draws between 5% and 35% of its turnover from the UAE depending on what projects it is working on, and Darlington-based hair and beauty operation Saks is opening outlets in Dubai and Qatar.

More recently, Newcastle-based post production firm Mere Mortals announced it was already picking up clients such as hoteliers Jumeirah Group after opening its Spitfire operation in Dubai.

Managing director David Jeffries says: “They’re having a bit of a run because TV and retail are expanding, so advertising is increasing. It’s not quite the gold rush it was, but it certainly hasn’t reached the saturation we have here in terms of retail and advertising.

“They’re still a fast-developing economy. We’ve got some pitching going on for some significant oil companies over there.”

The state-of-the-art studio Mere Mortals has established in Media City is already dealing with clients such as Emirates, which has helped to spark the rise in North East interest with its flights from Newcastle to Dubai. Passenger numbers were up by nearly a third in the year to April, and around a quarter of the passengers were businesspeople.

However, just with any export venture, it’s worth investigating what to expect. UKTI offers advice on what you can expect when you reach the UAE, and Jeffries says there are some interesting differences in how a business gets started somewhere like Dubai.

He says: “When you set up a Free Zone Limited Liability Company, you have to set up in a zone like Media City or Financial City, which is regulated by the government. It’s tax-free earnings, but they do charge you for set-up and visas for employees, and the offices are an empty shell so they charge you to make alterations and do fire and safety reports. Over here, you’d expect to start leasing the office once you’ve done the fit-out, but we found we’d had the office a month before we even had permission to start fitting out.

“Government bodies will take your year’s rent in three or four post-dated cheques. It seemed mad at first, but when you think that if you bounce a cheque you go to prison, it all starts to make more sense. Nobody seems to put things in the post either. It’s often couriered because it has to end up in someone’s hands.

“We’ve employed some people over there that are reasonably familiar with it and have been there five or six years. The bureaucracy is quite high in setting up, but once you start up it’s fairly plain sailing.”

If there’s one thing that most people with experience in trading in the UAE will agree on, it’s that you’ve got to be prepared not to win work in the country in one shot.

“The main thing is to be patient. It doesn’t happen overnight”, says the UKTI’s Geoff Charlesworth. “You’ve got to be consistent and persistent and keep coming back and not to expect to crack the market first time.

“Arabian businessmen will do business with people they feel they can trust. In the first couple of meetings, business is often not even talked about. It’s about getting to know you. One of the most common phrases is ‘How are you?’ and that means ‘Tell me about yourself’.”

Cramlington-based fire and safety system experts Advanced Electronics has been in the region since January 1 2008, when it set up a branch in the Dubai Airport Free Zone.

Middle East and Africa general manager Raed Abughazaleh says: “Dubai was the preferred choice, being a major hub in the area. Establishing in the free zone gave the company the freedom to register and be sponsored by the Government of Dubai where laws and regulations are clear and straightforward.

“We are into our fourth year and the office has shaped up quite nicely to provide both sales and marketing service to existing distributors throughout the Middle East and Africa region, in addition to providing training services and hands-on on our equipment.”

Advanced Electronics also has a research and development base in South Yorkshire as well as a trading subsidiary in the USA and partners across the Middle East, Europe and Asia. In all, it has a network covering over 30 global territories. Around 40% of its business now comes from non-UK areas.

Abughazaleh says: “It’s becoming more difficult for people in this part of the world to travel and secure visas to the UK and Europe, not to mention the cost of travel, whereas it is fairly easy for people to travel to Dubai. The company truly believes in local presence and global support and being in the region has enhanced our support to our customers.

“If a company wants a market share from this region, they must be present in the region.”

Companies like Mere Mortals have praised the work of the UKTI in helping them to establish their business in the region, and the organisation runs regular trade trips for businesses hoping to explore opportunities.

An average of 12 companies generally take part in the trade trips, and another is in the calendar for January 2012.

Charlesworth says: “There are opportunities across all sectors. For anybody who’s thinking about exports, Dubai is a great market to look at because it’s relatively small and they’re very pro-British and their way of doing business.

“It was a village when I was there back in 1985, and it’s become a cosmopolitan city. It’s changed out of all proportion from the place I knew. I’d recommend it for a holiday as well as business. I met my wife there and it is a place that’s very close to my heart.”